Campaign Ads Pour Into Stations

This year looks great, 2007 looks even better

In California, tobacco companies are bombarding TV with ads opposing a proposed tax on cigarettes, while energy companies fight a tax to fund alternative-fuel research. In Hartford, Conn., newscasts are stuffed with ads for hotly contested House and Senate races.

TV stations expect strong political advertising in even-numbered years, but 2006 is exceeding expectations. As Democrats and Republicans slug it out for control of Congress, pivotal races in 32 states command heavy spending. In 22 states, the governor’s office is up for grabs. Industry insiders say the number of tight races is the highest in years.

Political advertising on local TV may hit $1.6 billion this year, according to TNS Media’s Campaign Media Analysis Group (CMAG). That exceeds initial forecasts of $1.4 billion and approaches the $1.61 billion spent in 2004, a presidential-election year. “Candidates may have more money to spend than there is time to buy,” says Evan Tracey, COO of CMAG.

With automotive ads lagging, broadcasters are relishing the influx. Political spending is hottest in California, where issue ads and a high-profile gubernatorial campaign have pumped more than $160 million into the four largest markets. “The California markets continue to amaze us. The races continue to spend more every week,” says Julio Marenghi, president of ad sales for the CBS Television Stations. “There is more money there than we expected.”

According to Bear Stearns media analyst Victor Miller, CBS leads the pack, expected to take in $116 million in political ads. Gannett Broadcasting is projected at $86.4 million, Hearst-Argyle $69.7 million and ABC $62 million.

Political-hotbed states Ohio, Michigan and Pennsylvania are seeing intense spending. In Baltimore, state and federal races are so heated that stations forecast $15 million in political monies, triple the typical sum. “We haven’t seen this level of activity in years,” says Kathleen Keefe, VP of ad sales for Hearst-Argyle Television, which owns top-rated WBAL, an NBC affiliate.

Even so, some states have not seen the windfall. Weak Senate races have diminished stations’ expectations in the key states of Florida and New York.

Even as campaigns shift some money to cable and the Internet, broadcast remains the prime media buy, commanding 70%-85% of a media budget. “You need to maximize your eyeballs inside of a very intense selling period,” says CMAG’s Tracey. “If the idea is to drive message and drive turnout, broadcast is still the best option available.”

But the blitz can be a mixed blessing. Political orders come in daily and can make inventory management difficult. “Rather than weekly management sessions, you might have daily or even bi-daily meetings on the inventory,” says Charlie Pfaff, general manager of Pappas Telecasting’s KMPH and KFRE Fresno, Calif. In a duopoly, regular advertisers can be moved to a second station.

Even the lower-rated stations are reaping the benefits, including those without news, such as a CW outlet. “If a station’s syndicated comedies or court shows are priced right,” says CBS’ Marenghi, “campaigns are buying eyeballs that are potential voters.”

Despite online’s buzz, stations are not seeing near the demand for the Internet. Executives from several station groups say they are pushing Web buys but campaigns don’t seem to be biting. “We are still trying,” says one executive, “but it hasn’t materialized.”

Broadcasters are already looking to 2007 and 2008 and the presidential election. Candidates will try to make a mark in early-primary and swing states, such as New Hampshire, South Carolina and Ohio, as early as first quarter 2007. Hearst-Argyle owns stations in several such states.

“We’re going to be in these early races in a big way,” says Keefe. “So 2008 is already a meaningful part of any conversation about 2007.”